Publication: Monitor Volume: 3 Issue: 72

As the government analyzes the results of the federal budget in the first quarter of 1997, it is clear that it faces a major crisis. Tax collection is running at about 60 percent of the planned level, and is even lower than in the first quarter of 1996. When the Duma adopted the 1997 budget it was agreed that if revenue fell below 90 percent of the target level, the government would have to return to the Duma to gain approval for cuts in specific programs.

The government is now working on a revised 1997 budget, which Prime Minister Viktor Chernomyrdin is expected to present to the Duma on April 23. "Protected" clauses that cannot be cut (mainly social spending and debt payments) amount to half of budget spending, so one can expect draconian cuts in the remaining "discretionary" items. (Ekho Moskvy, April 8) In a typical maneuver to limit political damage to himself, Yeltsin chided Chernomyrdin in an April 8 meeting broadcast on television, complaining that only 42 percent of taxes had been collected in the first quarter, and demanding that the problem be addressed. (ORT, Reuter, April 8)

Different officials are putting out contradictory estimates of the rate of tax collection, and it is important to ascertain whether officials are talking about the federal budget or the consolidated budget (the latter includes the budgets of Russia’s 89 regions, which taken together are roughly equal to the federal budget). Sometimes officials talk about tax collection, and sometimes "revenue" — which may include receipts from the sale of government securities. Deputy Finance Minister Sergei Shatalov said total tax collection for the consolidated budget was 26 trillion rubles ($4.5 billion) in January, 30.6 trillion in February, and 38 trillion in March. (NTV April 7) This amounts to 58, 66, and 66 percent, respectively, of planned levels.